Mending the safety net

CIOs say public hospital tech gap threatens national health network

By Bob Brewin

Nov 14, 2005

Public "safety net" hospitals, which provide health care to everyone, regardless of their ability to pay, need a safety net of their own to handle the costs of installing and maintaining the health care
information systems that will be required to build the National Health Information Network President Bush
envisions.

That's the view of chief information officers at several publicly funded local hospitals nationwide and their trade group, the National Association of Public Hospitals and Health Systems (NAPH). A technology gap exists between public hospitals and the rest of the health care industry, the group says. Increased federal funding for electronic health record (EHR) systems in safety net hospitals is essential to close this gap, the CIOs say.

Doubters need look no further than the experience of treating people displaced by Hurricane Katrina. The storm's aftermath highlighted the importance of a nationwide EHR system, NAPH says. Even jurisdictions far from the hurricane-battered Gulf Coast, such as Marion County, Ind., struggled to provide health care to more than 1,100 Katrina evacuees who had no medical records. Many could tell clinicians only that they were taking "one white pill and two yellow pills," said Dr. Virginia Caine, director of the Marion County Health Department. The county includes Indianapolis.

Indianapolis medical facilities, including the county-backed Wishard Memorial Hospital, struggled with what Caine called medical illiteracy to care for the evacuees. She said a national EHR system would have made treatment easier for clinicians and patients.

Public safety net hospitals, which bear the financial burden for providing care for the uninsured, cannot handle the additional weight of installing new health IT systems on their own, Caine said. If the Department of Health and Human Services wants to establish EHRs nationwide early in the next decade, it needs to help fund IT systems in such hospitals, she said.

Bridging the gap

In a policy paper released in September, NAPH said the federal government needs to jump-start the acquisition of health IT systems through direct grants, loan guarantees, or low- or no-interest loans. The group also urged the federal backing of health IT demonstration projects with safety net hospitals as part of HHS' plan to develop a national health IT infrastructure.

Scott Wallace, executive vice president and chief executive officer of the National Alliance for Health IT, said there is almost universal agreement in the health care industry, at HHS and in Congress that safety net hospitals lack the financial resources to develop health IT systems and that they need help from the government and the private sector.

"Safety net hospitals cover a critical sector of the population," Wallace said. "They cannot do it without adequate funding."

The presidential Commission on Systematic Interoperability, which Wallace leads, supported federal funding for safety net hospitals' health IT systems in a report released last month. The report states that HHS should ask Congress within two years to authorize financial incentives for health care providers to invest in IT using a targeted approach that includes grants directed at small, safety net and financially challenged providers.

Dr. Mark Leavitt, medical director of the Healthcare Information and Management Systems Society, agreed that safety net hospitals need extra funding to close the technology gap, and he said those funds could come not only from the federal government but also from private-sector health care providers, such as Kaiser Permanente. The health care giant provided a $1 million grant in June to support the Oregon Community Health Information Network's use of EHRs.

Leavitt said he also believes safety net hospitals should receive differential payments from HHS and the Centers for Medicare and Medicaid Services (CMS) for the care of people without insurance, with some of that extra funding earmarked for IT.

Recent research supports that approach. In May, NAPH released a survey it conducted of its member hospitals on health IT systems. The results sharply delineate the technology gap. The report states that "because of their unique mission and payer mix, many public hospitals are in tenuous financial positions, which, to varying extents, limits their ability to invest" in health IT.

NAPH's survey shows that a little more than half of the public hospitals surveyed had installed or were installing EHRs in inpatient, ambulatory or emergency departments, but only 40 percent had installed or were installing them in physicians' offices. Public hospitals also lagged in the installation of picture archiving and communication systems (PACS) to store and manage digital images from X-rays and computerized tomography (CT) scanners.

Although NAPH's survey results are clear, interviews with CIOs at safety net hospitals show that some public hospitals have made capital investments in health IT systems that equal those of for-profit hospitals. Conversely, some public hospitals deal with a deeper technology shortage than some of their safety net peers.

Mikki Stier, senior vice president for government and external affairs at the Broadlawns Medical Center in Des Moines, Iowa, said the 200-bed safety net hospital could be the poster child for increased federal funding for health care IT systems.

To upgrade the hospital's aging systems, Stier said Broadlawns had to ask Polk County, which includes Des Moines, for a one-time emergency levy of $3.4 million in its last fiscal year, which ended in July. Broadlawns needed the levy because of the financial strain imposed by its patient mix. About 62 percent of the more than 150,000 patients treated each year at the hospital and its clinics are uninsured, the third-largest uninsured population of any hospital in the country, Stier said.

Broadlawns' IT systems used batch processing and ran on aging Alpha computers from long-defunct Digital Equipment Corp., according to Heath Bell, CIO of Broadlawns. The medical center maintained the museum-piece computers with a thin IT budget of $340,000 a year and a staff of 11. Funds provided by the levy will first be used to upgrade the hospital's patient registration and billing systems, with additional applications not deployed until 2008, Bell said.

Erlanger Health System, the safety net provider in Chattanooga, Tenn., which operates four facilities with a total of almost 500 beds, has an IT capital budget of $7 million this year and an IT staff of 110. Brad Brown, CIO at Erlanger, said the funds had to be used creatively because last year Erlanger absorbed $72 million in costs from treating the uninsured.

The provider wants to install a PACS to store and manage digital images, including X-rays and output from CT scanners. But because he cannot afford the capital costs, Brown said he has sent a request to vendors to lease a system on a risk- and gain-sharing arrangement. One scenario is a lease that will include a guaranteed reduction in film costs by using digital imagery, with a portion of that reduction in hospital costs shared with the vendor.

Brown would like to see additional federal funding for health care, but he also believes the government could help by backing development of standards-based IT systems to replace vendors' proprietary systems, which he said drive up overall costs and inhibit the exchange of information among providers. The development of health IT standards is a top goal for Dr. David Brailer, national coordinator for health IT at HHS.

Some safety net hospitals are healthier than others.

"We are not in the same dire straits as some of our counterparts," said Joanne Sunquist, CIO of Hennepin County Medical Center in Minnesota, which recently subsidized a $110 million EHR system from Epic Systems for its medical center in Minneapolis. The system will serve 4,000 employees and 600 physicians in the 400-bed hospital system.

Although the system is expensive, Sunquist said she believes the investment will cut costs by eliminating a hodge-podge of existing systems, improving productivity and reducing expensive duplicative tests on the same patient.

Another major metropolitan safety net hospital, Denver Health, which operates a 349-bed hospital, 10 community centers and 13 school clinics, has invested $220 million in IT systems since 1996.

Denver Health CIO Gregg Veltri calls this a strategic investment to improve clinical and financial processes with bottom-line savings for the safety net provider. The hospital's clinical IT systems are built primarily around applications from Siemens Medical Solutions to avoid the costs inherent in using systems from different vendors, he said.

Veltri said he always looks for ways to use the IT system and the organization's high-speed fiber-optic network to cut costs. For example, Denver Health will soon dump its traditional, analog phone system for a voice-over-IP system that is expected to save $300,000 a year in PBX maintenance costs.

But despite the large investments that Denver Health has made in IT -- including its annual IT capital and operating budget of $30 million -- Veltri believes HHS and CMS should help fund IT costs for safety net hospitals by using pay-for-performance incentives.

Kansas City pinch

Tom Pagano, CIO of Truman Medical Centers in Kansas City, Mo., which has 314 beds at two facilities, said the health care industry needs significant IT investments, but safety net hospitals have a financial challenge because reimbursements for patient care continue to shrink while a variety of projects vie for a pool of scarce capital dollars.

This means, for example, that public hospitals are forced to decide between investing in either a 64-slice CT scanner or new servers for a system to monitor newborn babies' health, but not both, Pagano said.

Truman has a capital IT budget of $15 million to $17 million and an annual operating budget of $5 million to $7 million. An IT staff of 100 supports about 450 applications. Another 100 employees work with medical records, some of which are still paper-based.

Pagano said he is frustrated by health IT systems' proprietary nature and believes development of integrated, standard systems could go a long way toward cutting his IT costs. "I want to wave a magic wand and end up with a small number of integrated platforms, which are cheaper, faster and better," he said.

Ron Margolis, CIO at the University of New Mexico Health Sciences Center, the safety net hospital in Albuquerque, said investment in health IT can better serve the uninsured and attract paying, insured customers who can help improve the bottom line.

The university is building a new 476,555-square-foot addition, which Margolis said will be a digital hospital, including Internet service in patient rooms. Internet access is something that paying patients will expect, or they may go to a competing hospital up the road, Margolis said.

Margolis has an annual IT budget of $5 million, but he argues that if HHS wants to develop a nationwide EHR system, the department must fund IT systems in safety net hospitals.

"We can't be asked to do more with less," Margolis said. CIOs at safety net hospital emphasize that they are not looking for handouts but investment dollars that will have bottom-line results.

Or, as the NAPH report on health IT in public hospitals concludes, "Public hospitals will require special considerations and targeted funding to help them keep pace with health IT investments being made in the rest of the hospital industry. Considering the millions of patients they treat each year, such targeted investments are likely to yield valuable efficiencies and improvements in the quality of patient care."

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